welcome

SV COLLEGE OF
ENGINEERING


 SEMINAR TOPIC:RISK MANAGEMENT



 Presented by
 Praneeth kumar Naidu. P
 Under guidance of
 N. Venkateswara reddy
 asst prof
Definition of risk
Ø
Ø The quantifiable likelihood of less than excepted
returns.
Ø
Ø Unexpected returns on investment is called a risk.

Types of Risk
 There are three main forms of risk that a financial
institution is subject to
üMarket risk
üCredit risk
üOperational risk
 Market Risk
Ø Market risk refers to the possibility of loss on investments
or trading operations


Ø There are a few key macro events which could increase the
risk to a trading portfolio. 
Credit Risk
Ø Credit risk and market risk are closely tied together.
 You can view credit risk as the risk of default on a debt

payment.
Ø   Market risk premiums and prices increase as
the perceived credit risk increases
Operational Risk
Operating risk defines the risk that originates from an
organizations people and processes.
This type of risk accounts for fraudulent activity, mistakes
by employees, and even legal risks
Financial Risk management
Ø Financial risk management is the practice of
creating economic value in a firm by using
financial instruments to manage exposure to
risk, particularly credit risk and market risk
Ø Financial risk management can be qualitative
and quantitative
When to use finance risk management:
This suggests that firm managers likely have many
opportunities to create value for shareholders using
financial risk management
The concepts of financial risk management change
dramatically in the international realm
 12 principles:
Ø
Ø Stakeholder Involvement
Ø Organizational Objectives
Ø Management of Risk Approach
Ø Reporting
Ø Roles & Responsibilities
Ø Organizational Context

Ø Support Structure
Ø Early Warning Indicators
Ø Review Cycle
Ø Overcoming Barriers to the Management of
Risk
Ø Supportive Culture
Ø Continual Improvement
Business Benefits
Ø
Ø Enhance decision making
Ø Improve regulatory and economic capital management
Ø Greater transparency
Ø Cost-effective operations
Conclusion
Risk management represents an assortment of challenges
for both national and international banking institutions
offering asset management products and services. On the
one hand it is connected with difficulties in development
of appropriate analytical and statistical risk measures for
many asset management positions
THANK U